The members present their annual report and financial statements for the year ended 31 October 2017.
The principal activity of the limited liability partnership continues to be the development and rental of the property at Cartmell Road, Blackburn. Additionally during the previous year the partnership bought and sold a property.
The members' drawing policy allows each member to draw a proportion of their profit share, subject to the cash requirements of the business.
A member's capital requirement is linked to their share of profit and the financing requirement of the l imited liability partnership . There is no opportunity for appreciation of the capital subscribed. Just as incoming members introduce their capital at "par", so the retiring members are repaid their capital at "par".
The designated members who held office during the year and up to the date of signature of the financial statements were as follows:
This report has been prepared in accordance with the special provisions relating to small companies within Part 15 of the Companies Act 2006 .
In order to assist you to fulfil your duties under the Companies Act 2006, we have prepared for your approval the financial statements of Fortuna Lancashire LLP for the year ended 31 October 2017 set out on pages 4 to 14 from the limited liability partnership’s accounting records and from information and explanations you have given us.
As a practising member firm of the Institute of Chartered Accountants in England and Wales (ICAEW), we are subject to its ethical and other professional requirements which are detailed at http://www.icaew.com/en/members/regulations-standards-and-guidance.
This report is made solely to the limited liability partnership's members of Fortuna Lancashire LLP, as a body, in accordance with the terms of our engagement letter dated 6 July 2017. Our work has been undertaken solely to prepare for your approval the financial statements of Fortuna Lancashire LLP and state those matters that we have agreed to state to the limited liability partnership's members of Fortuna Lancashire LLP, as a body, in this report in accordance with ICAEW Technical Release 07/16 AAF. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than Fortuna Lancashire LLP and its members as a body, for our work or for this report.
It is your duty to ensure that Fortuna Lancashire LLP has kept adequate accounting records and to prepare statutory financial statements that give a true and fair view of the assets, liabilities, financial position and profit of Fortuna Lancashire LLP. You consider that Fortuna Lancashire LLP is exempt from the statutory audit requirement for the year.
We have not been instructed to carry out an audit or a review of the financial statements of Fortuna Lancashire LLP. For this reason, we have not verified the accuracy or completeness of the accounting records or information and explanations you have given to us and we do not, therefore, express any opinion on the statutory financial statements.
Fortuna Lancashire LLP is a limited liability partnership incorporated in England and Wales. The registered office is 1st Floor, Adhan House, 52a Preston New Road, Blackburn, BB2 6AH.
The limited liability partnership's principal activities are disclosed in the Members' Report.
These financial statements for the year ended 31 October 2017 are the first financial statements of Fortuna Lancashire LLP prepared in accordance with FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland. The date of transition to FRS 102 was 1 November 2015. The reported financial position and financial performance for the previous period are not affected by the transition to FRS 102.
The financial statements are prepared in sterling , which is the functional currency of the limited liability partnership. Monetary a mounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include investment properties at fair value. The principal accounting policies adopted are set out below.
These financial statements for the year ended 31 October 2017 are the first financial statements of Fortuna Lancashire LLP prepared in accordance with FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland. The date of transition to FRS 102 was 1 November 2015. The reported financial position and financial performance for the previous period are not affected by the transition to FRS 102.
Turnover represents amounts receivable for rents , management fees and property sales net of VAT.
If, at the Balance sheet date, completion of contractual obligations is dependent on external factors (and thus outside the control of the Limited Liability Partnership), then revenue is recognised only when the event occurs. In such cases, costs incurred up to the Balance sheet date are carried forward as work in progress.
Members' participation rights are the rights of a member against the LLP that arise under the m embers' agreement (for example, in respect of amounts subscribed or otherwise contributed remuneration and profits).
Members' participation rights in the earnings or assets of the LLP are analysed between those that are, from the LLP's perspective, either a financial liability or equity, in accordance with section 22 of FRS 102. A member's participation rights including amounts subscribed or otherwise contributed by members, for example members' capital, are classed as liabilities unless the LLP has an unconditional right to refuse payment to members, in which case they are classified as equity.
All amounts due to members that are classified as liabilities are presented within 'Loans and other debts due to members' and, where such an amount relates to current year profits, they are recognised within ‘Members' remuneration charged as an expense’ in arriving at the relevant year’s result. Undivided amounts that are classified as equity are shown within ‘Members' other interests’. Amounts recoverable from members are presented as debtors and shown as amounts due from members within members’ interests.
Once an unavoidable obligation has been created in favour of members through allocation of profits or other means, any undrawn profits remaining at the reporting date are shown as ‘Loans and other debts due to members’ to the extent they exceed debts due from a specific member.
Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. The surplus or deficit on revaluation is recognised in profit or loss .
Where fair value cannot be achieved without undue cost or effort, investment property is accounted for as tangible fixed assets.
Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
The limited liability partnership has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the limited liability partnership's statement of financial position when the limited liability partnership becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss , are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in or .
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the limited liability partnership transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the limited liability partnership after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future paymen ts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. A m ounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as fair value though profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the limited liability partnership’s obligations expire or are discharged or cancelled.
Equity instruments issued by the limited liability partnership are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the limited liability partnership.
The average number of persons (excluding members) employed by the partnership during the year was 1 (2016 - 1).
The investment property at Cartmell Road, Blackburn was included at a members' valuation as at 31 October 2017. The historical cost of the property is £2,996,425 (2016 - £2,996,425).
The bank loan is secured upon the partnership's property at Cartmell Road, Blackburn.
In the event of a winding up the amounts included in "Loans and other debts due to members" will rank equally with unsecured creditors.
During the year the LLP has loaned monies to the following:
CRE Investments LLP £600,000
Adhan Homes Limited £1,004,000
Greenland Properties £286,701 (sole trader of S Patel)
During the year the LLP received managements charges of £180,000 from CRE Investments LLP and paid management charges to Dawson Real Estate Limited of £20,000 and CRE Investments LLP of £195,000.
The business is ultimately controlled by Mr S Patel, a designated member, by virtue of his shareholding in Blackburn Commercial Estates Limited, the other designated member.